(GMA News) A stockbroker is getting 14 years of jail time after a Pasig court ruled in favor of the Securities and Exchange Commission (SEC) concerning its illegal trade transactions complaint it filed over two decades ago.

In a decision dated May 7, the Pasig City Regional Trial Court Branch 67 found Johnny S. Yap of Solar Securities Inc. guilty beyond reasonable doubt of violation of Section 26(a)(I)(1) of the Revised Securities Act, now Section 24.1(a)(i) of the Republic Act No. 8799 or the Securities Regulation Code (SRC).

Yap was sentenced to 14 years imprisonment and a fine of P1 million.

The court also ordered the issuance of a warrant of arrest against Yap.

The SEC said the Pasig court ruling is the fifth conviction it secured since the SRC’s enactment in 2000.

The court ruling stemmed from a complaint filed by the SEC against Yap, who was then the president, sales manager, and director of Solar Securities, after the brokerage was found to have committed “wash sale” transactions composed of 142 buy and sell orders for stocks of Best World Resources Corporation (BW) during the months of June and October 1999.

Wash sales refer to transactions wherein the buyer and seller of the stock share a beneficial owner, according to the SEC.

A beneficial owner is any person who, directly or indirectly, has or shares voting power, which includes the power to vote, or to direct the voting of, such security; and/or investment returns or power, which includes the power to dispose of, or to direct, the disposition of such security, it said.

The corporate regulator said it formed Special Operations Group (SOG) in August 2000 to investigate the matter and found that Solar Securities’ transactions were wash sales not only because the brokerage was both the buyer and the seller in all the 71 buy order and 71 sell order transactions, but also because the offers and bids were made at very close intervals.

Section 24.1(a)(i) of the SRC states that it shall be unlawful for any person acting for himself or through a dealer or broker, directly or indirectly, to create a false or misleading appearance of active trading in any listed security traded in an exchange or any other trading market by effecting any transaction in such security which involves no change in the beneficial ownership thereof.

The Pasig court ruled that Yap, as Solar Securities’ compliance officer, had the duty to ensure that the company was compliant with the regulations and legal requirements for its trading transactions.

Thus, Yap was deemed to have directly or indirectly executed transactions. Yap also admitted that he himself executed some of the transactions.

Further, the court concluded that the transactions involved no change in the beneficial ownership.

Evidence showed that Solar Securities paid itself at the price it offered to sell the BW shares.

“In fact, no commission was paid and/or earned in all these transactions, which totally negates any appearance that Solar was transacting for its clients,” according to the decision.

Moreover, the court ruled that the transactions were entered into for the “purpose of creating a false or misleading appearance of active trading or misleading appearance with respect to the market of such security.”